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Menu Engineering - How Profitable is your Menu?

One of the most effective marketing tools for any Food & Beverage Business is right under the nose of your customer…literally. The design and layout of your menu can increase profits if you know what your customers are looking for and more importantly what items deliver the best return. This blog will look at how to identify the Stars, Puzzles, Plow Horses and Dogs across your menu and give you the understanding of how to pull all of this together.

To start menu engineering you need to understand what you sell and what the cost is per dish.

For example, if we take our Texan Destroyer Burger – this is made up of 3 beef patties, 3 cheese slices, 3 slices of maple streaky bacon, brioche bun, lettuce, tomato, onion, gherkins, chipotle mayo, Texan BBQ sauce, french fries and 2 onion rings - you may also include that you serve it with a wooden skewer and on grease proof paper to give a more accurate cost per dish.

The overall cost for the plate is £6.70 and the item is retailed at £15.95 therefore the Gross Profit (GP) is £9.25 per item sold with GP % of 58% and cost % of 42%.

Collecting this information can seem like a daunting task but the right EPoS & Stock solution will allow you to report on items such as:

  • Food costs
  • GP £
  • GP %
  • Theoretical GP – The profit of each menu item based on sale value less cost
  • Actual GP – The profit of each salable item taking wastage, discount and promotions into consideration

 

How are your Menu Items Performing?

Armed with the information on profitability the next step is to understand the popularity of each dish – Using your EPoS system pull a report over a defined time-period such as the last month or the last week, the report may look like the below:

Once you have the popularity and profitability you can start to plot your menu items on a graph similar to the one below;

The dots mark each of the menu items and categorises them into Dogs, Plow-horses, Puzzles and Stars. Now you have this plotted what does it all mean to your business?

Dogs – Low Profitability and low popularity

The dogs on your menu deliver little return and are not popular amongst your customers so you may ask why do I have them? The first question to ask is who buys these menu items as it could be a kids’ meal in which case you need to keep but move away from the prime spots on your menu. It may be a case to remove these items completely as part of a menu redesign

Plow-horses – Low Profitability and High Popularity

These are popular menu items delivering little or no profit to your bottom line, you may find some of these dishes costing your business more to make delivering a negative effect on your bottom line. This could be a premium menu item such as a Steak Sandwich sold on a lunchtime – consider using a lesser cut of beef or reducing the portion size whilst maintaining the quality. It may be a case that the portion is too big and plates are regularly coming back half eaten in which case you reduce based on review.

Puzzles – High Profitability and Low Popularity

As the name suggests these are puzzling items as they deliver a great return but for some reason customers are not choosing these items. Could this simply be a case of not having these dishes in the right place on your menu or could it be the price appears too high to the customer – do you use a dotted line to the price? It may be that customers do not like these menu items in which case you will need to redevelop the dishes or reinvent them. Another alternative is to create the ‘Specials’ section filled with these menu items to generate a buzz amongst your customers.

Stars – High Profitability and High Popularity

This is where we want all of our products to sit and if you find you have items in this box do not be tempted to change them or reinvent them – these products are selling well and pushing your GP up so keep them on the menu and look to promote them in any way you can. These are the products that your menu design should be highlighting.


 

How can you build your own report?

A good quality EPoS and Stock Management system will provide the above information. You need to pull the following reports:

  • Sales Mix showing Retail Sales value and quantity sold
  • GP analysis of cost vs retail

Power EPOS supply cutting edge Point-of-Sale solutions with fully integrated Stock and Inventory management giving you access to the reports needed to better understand your menu and drive increased revenues.

Use our ‘Contact Us’ page to find out how we can give you the Power to Perform. Our Sales Experts can also give you a starter in pulling together this information once you are up and running with our solutions.

In our next blog we will be looking at what to do with this information and how you put the Stars in your menu – follow us on Twitter to make sure you don't miss this next installment.

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